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Revenue Growth: 3.6% currency comparable growth for 2024.
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EBIT Margin: 13.8% for 2024.
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Free Cash Flow: 7.1% of revenue.
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Return on Capital Employed (ROCE): 18.1% for 2024.
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Operating Cash Flow: Increased by 20%, EUR66 million higher.
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Dividend: Increased to EUR0.75 per share from EUR0.40 last year.
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Marine Revenue Growth: 5.5% with a margin of 15.9%.
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Land Revenue Change: Decreased by 2.2% with an improved margin of 7%.
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Net Finance Costs: Decreased by EUR47 million due to foreign exchange gains.
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CapEx: EUR242 million, excluding EUR23 million for a new head office.
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Leverage: 0.2 times at year-end.
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2025 Outlook: EBIT margins expected between 11% to 15%, free cash flow between 6% to 9%, and ROCE above 15%.
Release Date: February 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Fugro NV (FUGRF) significantly improved its margins in 2024, with three out of four regions achieving double-digit margins.
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Operating cash flow increased by 20%, leading to a dividend increase to EUR0.75 per share from EUR0.40 last year.
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The company achieved its midterm targets for EBIT margin, free cash flow, and return on capital employed ahead of schedule.
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Fugro NV (FUGRF) is well-equipped to capture emerging opportunities in new market segments despite geopolitical uncertainties.
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The company has a diversified portfolio, serving various markets such as oil and gas, renewables, infrastructure, and water, which enhances its resilience.
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Fugro NV (FUGRF) faced headwinds in the Americas and the Middle East due to lower activity and cautious spending from oil companies.
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The offshore wind market in the United States is experiencing uncertainties, impacting Fugro NV (FUGRF)'s revenue in the region.
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The company's marine order intake in Q4 was down 28% year over year, with significant declines in the Americas and Europe.
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Fugro NV (FUGRF) anticipates challenges in the first half of 2025 due to current dynamics in the US market.
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The geophysical market is facing increased competition, leading to pressure on pricing and utilization rates.
Q: Can you explain the path towards achieving a 15% EBITDA margin and what headwinds could lead to the lower end of the range? A: Barbara Geelen, CFO, explained that the 11% to 15% margin target is set early in the year, with uncertainties in the US market playing a role. Operational excellence and strict cost control, especially in the US, are crucial. The mix of services, including new data and software solutions, could impact margins. The challenge is to maintain and grow margins over time, with recurring revenue expected to positively influence margins.
Q: What activities did Fugro undertake in Japan, and was it related to Mitsubishi? A: Mark Heine, CEO, stated that Fugro has had a local presence in Japan for over 25 years, initially supporting Japanese clients abroad. With the development of the wind business in Japan, Fugro has been involved in pilot projects and site characterization work for multiple clients, including Mitsubishi.
Q: How should we interpret the guidance for 2025, especially regarding growth in the first half of the year? A: Mark Heine, CEO, acknowledged the difficulty in predicting exact outcomes due to uncertainties, particularly in the US. While growth is expected for 2025, the impact of current uncertainties, especially in the Americas, makes it challenging to provide precise guidance. Fugro will remain flexible and responsive to market dynamics.
Q: Have there been any project cancellations in the US, and do you foresee a return to normal activity levels in the second half? A: Mark Heine, CEO, confirmed a specific project cancellation in Q4 and noted that some projects are paused for multiple years. While some activities will continue, the business will shift focus to other markets like oil and gas, CCS, and critical minerals. A return to normal activity levels in the second half is not expected.
Q: What is the current status of the geophysical market, and is there increased competition? A: Mark Heine, CEO, explained that the geophysical market has seen increased competition, with more companies entering the offshore wind sector. While Fugro anticipated this shift, the market remains competitive, particularly in geophysics, which has lower barriers to entry.
Q: Can you provide insights into the unmanned fleet's revenue and future growth expectations? A: Mark Heine, CEO, did not disclose specific revenue figures for the unmanned fleet due to competitive sensitivity. However, he highlighted that Fugro has 10 USVs in operation, with ongoing development in deeper water capabilities and remote solutions, indicating growth potential in this area.
Q: What impact did the Middle East conflicts have on Fugro's operations, and do you anticipate a recovery in the region? A: Mark Heine, CEO, noted that the Middle East conflicts led to idle vessel time and significant financial impact. However, Fugro expects a recovery in 2025, supported by a strong order backlog in the region.
Q: How does Fugro plan to manage CapEx in light of market uncertainties, particularly in the US? A: Barbara Geelen, CFO, stated that while US market visibility is not a key driver, Fugro remains committed to investing in future technologies like USVs and deep-sea capabilities. The company will adjust its CapEx plans based on market developments and opportunities, maintaining flexibility to achieve strategic objectives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
